Sunday, October 21, 2007

Inhaled Insulin a Bust; Drug Development isn't that easy.

Free millions of diabetes patients from daily injections. Sounds intriguing, doesn't it? If there was a way to do this, then the replacement product would make a mint, right? Not so fast. Drug giant Pfizer announced this week that it was pulling it's groundbreaking version of insulin, Exubera. Launched little over a year ago, Pfizer and it's licensing partner, biotech Nektar therapeutics, had big plans for Exubera, projecting ultimate revenues of $2 billion. Both spent over a decade working on the drug, and pulling it from the market will come with a big write-off, almost $2.8 billion, one of the costliest drug failures ever.

Just another sign that finding blockbusters (the term for drugs that net over $1billion at maturity) is getting harder to do. Many pharmaceutical companies have begun targeting smaller niche indication areas because of reduced cost to develop and market such drugs. Most people look at market successes such as Pfizer aging Lipitor franchise, which earns the company $13 billion in revenue, and flush with envy. But this does not count the cost and risk that companies face in bringing drugs to market. All of those successes must pay for drug development and for the failures, such as Exubera, and still yield the next generation of winners.

The irony is that Exubera is a technical success. It works. But it was also a big risk. Diabetes is a widespread chronic disease, and therefore treatments for it must undergo very large clinical trials to understand their effects on such a broad target market, and over the long periods of time that the drug must be taken. Exubera failed due to a number of factors, all market driven, which illustrates the tricky nature of making decisions to launch new products like these.

First off, it costs too much. Insulin is not a particularly cheap drug to make, and because much of the drug is broken down in the lungs before it reaches, Exubera requires ten times the normal dosage for injected insulin! The normal rule of thumb for daily therapies such as diabetes or cholesterol treatments are that they are affordable at a rate of about $2-3/day. Exubera costs $5/day.

Secondly, it is somewhat complex to administer. One would think that a diabetes patient might to anything to avoid giving himself daily injections, but the reality is that companies have made injected insulin therapy fairly straight forward. Such innovations as pen injectors, and insulin pumps have taken much of the difficulty out of administering an injected therapy. Exubera's inhaler is a wieldy device that takes some time to learn and is used very differently from traditional injected therapy.

Finally, even though Exubera was shown safe to the lungs over long periods during its clinical trials, FDA was fairly tough on Pfizer and required warnings on the drug label. Doctors, continued to have concerns over the long term use of the therapy. This is again, not so much a technical issue as one of market acceptance, and consumer preference.

The outcome at the intersection of all of these factors are difficult to predict, but the investment required to go through clinical trials is not. This means that someone had to make a call on whether to invest the money to prove the drug worked, before they knew if the drug would sell. Sometimes those decisions succeed, and sometimes they fail, and the people who make them, instead of being reviled for making too much profit as the pharmaceutical industry is, should be allowed to make more profit.


softwareNerd said...

One other company (perhaps more) is still pursuing inhaled insulin therapies.

Kendall J said...

Hi Snerd,

How right you are. There are companies still working on inhaled insulin, including Mannkind and Lilly. But notice that each takes a different strategy with respect to how they pay for the investment, and what business model they will choose to go with, and which markets they will target.

I don't want anyone to think from my post that I don't think that inhaled insulin cannot be launched as a product. I think it will eventually find its proper place. The company you cite is a midsized pharma company that probably has smaller aspirations and thus smaller investment needs for inhaled insulin. Pfizer thought it could be a blockbuser, which it can't.

My personal bet in the blockbuster category for insulin therapy is actually oral insulin. It still suffers from technical roadblocks, but promises to actually have better control than injected therapies, and not have any of the long term concerns that inhaled insulin has.

Also, another couple of companies are working on insulin patches for transdermal delivery.

I won't get into all the details here, but I have studied this market in detail for my work, and it is a fascinating example of the pharma industry.